China’s services activity growth slows in April, but new business and export orders accelerate

China’s expansion of services activity slowed somewhat amid rising costs, but growth in new orders accelerated and business sentiment rose solidly, boosting hopes of a sustained economic recovery, a private sector survey showed on Monday. fair.

“The strong start to the year is consistent with Caixin’s manufacturing and services PMIs, which have remained in expansionary territory for several consecutive months,” said Wang Zhe, senior economist at Caixin Insight Group.

Overall, new business reached the highest level since May last year, while improved external demand and growth in tourism activity helped drive growth in new export orders to the fastest pace in the last 10 months.

This, in turn, helped lift business confidence among Chinese service providers over the next 12 months to its highest level this year.

Businesses continued to face some cost pressure, with increases in input prices for materials, labor and energy, although the increase remained below the long-term survey average.

This led companies to increase the prices they charged their customers, although they remained reluctant to fill the vacancies created by the exits.

“Consistent efforts should be made to ensure that previous policies are implemented effectively and quickly, maintaining the current momentum of economic recovery and eventually improving overall market expectations,” Wang said.

The Caixin/S&P composite PMI, which tracks the services and manufacturing sectors, rose to 52.8 last month from 52.7 in March, marking the fastest pace since May 2023.

China’s economy has struggled to achieve a solid post-Covid recovery, mainly due to the cascading effects on confidence and demand from a prolonged crisis in the property sector.

While pockets of strength in the first-quarter gross domestic product report have raised hopes of a steady recovery through the rest of the year, the general consensus among economists is that a robust recovery is still some way off.

Investors and analysts say China’s structural reform efforts must be accompanied by greater stimulus measures to promote a stronger and more sustainable economic recovery.